What is IDE.L's Intrinsic value?

IDE Group Holdings PLC (IDE.L) Intrinsic Value Analysis

Executive Summary

As of May 22, 2025, IDE Group Holdings PLC's estimated intrinsic value ranges from $438.66 to $1134.20 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $474.88 +603.5%
Discounted Cash Flow (5Y) $438.66 +549.9%
Earnings Power Value $1134.20 +1580.3%

Is IDE Group Holdings PLC (IDE.L) undervalued or overvalued?

With the current market price at $67.50, the stock appears to be significantly undervalued.

Understanding Intrinsic Value

Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate IDE Group Holdings PLC's intrinsic value, including:

  1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows
  2. Earnings Power Value (EPV): Values the company based on its current earnings power, assuming no growth

Weighted Average Cost of Capital (WACC)

The cost of capital is a critical factor in valuation models, representing the required return for investors.

WACC Component Low High
Long-term bond rate 4.4% 4.9%
Equity market risk premium 6.4% 7.4%
Adjusted beta 1 1.15
Cost of equity 10.9% 14.0%
Cost of debt 4.0% 6.0%
Tax rate 37.4% 45.4%
Debt/Equity ratio 1.37 1.37
After-tax WACC 6.0% 7.8%

Valuation Methods

1. Discounted Cash Flow (DCF) Valuation

Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:

  • Forecast Period: 5-year DCF and 10-year DCF
  • Terminal Growth Rate: 0.0% (range: 3.0% - 5.0%)
  • Discount Rate: 6.9% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $14 (FY12-2022) to $18 (FY12-2032)
  • Net profit margin expansion from -3% to -5%
  • Capital expenditures maintained at approximately 0% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $439 $26M 70.2%
10-Year Growth $475 $28M 52.7%
5-Year EBITDA $156 $12M 35.4%
10-Year EBITDA $247 $17M 20.3%

3. Earnings Power Value (EPV)

EPV assesses a company's value based on its current normalized earnings power, assuming no growth.

EPV Component Value
Normalized Earnings $4M
Discount Rate (WACC) 7.8% - 6.0%
Enterprise Value $53M - $68M
Net Debt $4M
Equity Value $49M - $64M
Outstanding Shares 0M
Fair Value $979 - $1,289
Selected Fair Value $1134.20

Key Financial Metrics

Metric Value
Market Capitalization $3M
Enterprise Value $8M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 5.75
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 1.37

Investment Decision Framework

To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:

  1. Forecast Certainty: DCF methods rely on long-term projections, while earnings power value focuses on current normalized earnings
  2. Business Model Alignment: Dividend models are more appropriate for mature companies with established dividend policies
  3. Historical Accuracy: How well each method has predicted fair value historically

Valuation Weight Matrix

Valuation Method Weight Weighted Value
Discounted Cash Flow (10Y) 46% $142.46
Discounted Cash Flow (5Y) 38% $109.67
Earnings Power Value 15% $113.42
Weighted Average 100% $562.38

Investment Conclusion

Based on our comprehensive valuation analysis, IDE Group Holdings PLC's weighted average intrinsic value is $562.38, which is approximately 733.2% above the current market price of $67.50.

Key investment considerations:

  • Strong projected earnings growth (-3% to -5% margin)
  • Consistent cash flow generation

Given these factors, we believe IDE Group Holdings PLC is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.